When it comes to finances, think of time as an ally. We need time to make our dreams come true. For our 2004 BLACK ENTERPRISE Financial Fitness Contest winners, the last year has been an interesting one filled with victories and disappointments. Armed with instructions from the financial advisers we provided, they made positive change and have grown through the experience. Here is a look at what happened to four of our winners from 2004.
Debt was a four-letter word that clouded an otherwise bright financial future for the Whittington family of Sicklerville, New Jersey. Dwayne and Hermennia took action and eliminated their $26,000 credit card bill when they refinanced their second mortgage. Unlike many who refinance and pay off debts, they haven’t run up new credit card balances. Instead, they have developed the discipline to pay off credit card bills in full each month. The only other major debt they have is the $20,000 left on their first mortgage. They plan to have that paid off within two years.
The Whittingtons are fortunate that another big concern has disappeared. They had no real savings to send eldest son Michael to college, but he won a full football scholarship to Urbana University in Ohio. Next year, their middle son Marcus, an aspiring studio engineer, will attend a one-year program at a school in New York. The cost is only $14,000—substantially lower than the typical $80,000 tab for a four-year private university. “He’ll get loans, and we’ll help pay either part or all of the loan,” says Dwayne. The Whittingtons are providing better educational opportunities for their children then they expected. And they have plenty of time to begin a college savings program for 2-year-old Malcolm.
The positive news for the Whittingtons continues. Hermennia received a $6,000 raise when she was promoted to postmaster at a new location earlier this year. Dwayne recently left his job as an investment banker so that he could pursue a more lucrative opportunity. Overall, he remains optimistic. “We have long-term plans to increase our net worth, boost our 401(k) savings, upgrade our real estate, and buy investment property,” he says. “Most importantly, after the debt consolidation, we are committed to not running up credit card debt. We’ve learned our lesson.”
THE ADVICE: Develop a secondary wealth-creation vehicle. Pursue real estate investing by buying as many as seven properties between now and retirement.
THE FOLLOW-THROUGH: The Whittingtons are eyeing real estate, but not for investment purposes just yet. Dwayne says they want to buy a bigger home by taking advantage of their property’s appreciation since their mortgage is nearly paid off. He believes they can get $250,000 for the house they bought for $150,000. They will use the proceeds of the sale to get a $400,000 to $500,000 house, being careful not to take on a huge mortgage. The investment property will have to wait, Dwayne says.
THE ADVICE: Extend retirement age from 55 to 62 and maintain an investment mix of 80% equities and 20% fixed-income.
THE FOLLOW-THROUGH: Dwayne is holding